Category Archives: Topic Index

Candidate Qualifications

Qualifications for persons wishing to serve on a HOA’s board of directors (aka “candidate qualifications”) are governed by Civil Code § 5105. Persons who do not satisfy the candidate qualifications in effect at the time of nomination are disqualified from nomination. (See “Candidate Nomination”.) The types of candidate qualifications that may or must be adopted under Civil Code § 5105 are discussed below:

Mandatory Candidate Qualification: Must be a Member
An association must disqualify a person from a nomination as a candidate if that person is not a member of the association at the time of nomination. (Civ. Code § 5105(b).) “Member” in this context means the person must be an owner of a separate interest (e.g., an owner of a Lot or Unit) within the association at the time of nomination, regardless of any contrary definition of “member” contained in the association’s governing documents. (Civ. Code § 4160.)

Directors Must Retain Membership Status in order to Serve – A sitting director who ceases to be a member must be disqualified from continuing to serve as a director. (Civ. Code § 5105(b).)  

Mandatory Disqualification of “Termed-out” Directors 
An association must disqualify a nominee if that person has served the maximum number of terms or sequential terms allowed by the association.  (Civ. Code § 5105(b).) (*Note – this is effective as of January 1, 2024.) 

Discretionary Candidate Qualifications
Through its election rules or bylaws, an association may adopt the following candidate qualifications: (Civ. Code § 5105(c))

Current in Assessments. An association may require a candidate, and a director during their board tenure, to be current in the payment of regular and special assessments, subject to the following:

Nonpayment of fines, fines renamed as assessments, collection charges, late charges or costs levied by a third party may not be used as a basis for disqualification. (Civ. Code § 5105(d).)

If the person has paid the regular or special assessment under protest, the person may not be disqualified from nomination. (Civ. Code § 5105(d)(1).)

If the person has entered into a payment plan pursuant to Civil Code § 5665, the person may not be disqualified from nomination. (Civ. Code § 5105(d)(2).)

Joint Ownership Interest. An association may disqualify a person from nomination as a candidate if the person, if elected, would be serving on the board at the same time as another person who holds a joint ownership interest in the same separate interest (same Lot or Unit) as the person, and the other person is either a candidate for the current election or is an incumbent director. (Civ. Code § 5105(c)(2).)

Member for Less than One (1) Year. An association may disqualify a person from nomination as a candidate if that person has been a member of the association for less than one (1) year. (Civ. Code § 5105(c)(3).)

Past Criminal Conviction. An association may disqualify a person from nomination if that person discloses, or if the association is aware or becomes aware of, a past criminal conviction that would, if the person was elected, either prevent the association from purchasing fidelity bond coverage required by Civil Code § 5806 or terminate the association’s existing fidelity bond coverage. (Civ. Code § 5105(c)(4); See also “Fidelity Bond Coverage.”)

IDR Offer Before Disqualification
An association may not disqualify a person from nomination if the person has not been provided an opportunity to engage in Internal Dispute Resolution (IDR) with the association. (Civ. Code § 5105(e); See also “Internal Dispute Resolution (IDR)”.)

Candidate Qualifications Must Apply to Sitting Directors
Candidate qualifications govern who is qualified to run for and be elected to the HOA’s board of directors in a director election. Director qualifications, by contrast, govern who remains qualified to continue to serve on a HOA’s board of directors. However, Civil Code Section 5105 requires that any basis used by an association for disqualifying a candidate must also apply equally to sitting directors of the association:

“If an association disqualifies a nominee pursuant to this section, an association in its election rules shall also require a director to comply with the same requirements.” (Civ. Code § 5105(f).)

Related Links

The New State of HOA Election Laws – Published on HOA Lawyer Blog (October, 2019)

Accessory Dwelling Units (ADUs)

Civil Code Section 4751 makes any provision in an HOA’s governing document that “effectively prohibits” or “unreasonably restricts” the construction or use of an accessory dwelling unit (an “ADU”) or a junior accessory dwelling (a “JADU”) on a lot that is zoned for single-family residential use is void and unenforceable under California law. (Civ. Code § 4751(a).)

Definitions of ADU and JADU

“Accessory Dwelling Unit” (ADU) means an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons. It must include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated. An ADU also includes the following (Gov. Code § 65852.2(i)(4).):

      • An “efficiency unit,” as defined under the Section 17958.1 of the Health & Safety Code.  Efficiency units must have (a) living area of at least 150 square feet, (b) a kitchen sink, cooking appliance and refrigeration facilities, and (c) a separate bathroom containing a water closet, lavatory and bathtub or shower.
      • A manufactured home, as defined in Section 18007 of the Health & Safety Code.

“Junior Accessory Dwelling Unit” (JADU) means a unit that is no more than 500 square feet in size and contained entirely within an existing single-family structure. A JADU may include separate sanitation facilities, or may share sanitation facilities with the existing structure.  (Gov. Code § 65852.22(g)(1).)

Reasonable Restrictions by an HOA
Section 4751 does not apply to provisions of an HOA’s governing documents that impose “reasonable restrictions” on ADUs or JADUs.  “Reasonable restrictions” means restrictions that do not unreasonably increase the cost to construct, effectively prohibit the construction of, or extinguish the ability to otherwise construct, an accessory dwelling unit or junior accessory dwelling unit consistent with the provisions of Government Code Sections 65852.2 or 65852.22. (Civ. Code § 4751(b).)  The types of reasonable restrictions on ADUs and JADUs are set forth in Government Code Sections 65852.2 and 65852.22, respectively.  They generally include the following:

Reasonable Restrictions on ADUs (Gov. Code § 65852.2)

  •  The ADU may be rented separate from the primary residence.
  • The total area of floorspace of an ADU attached to the primary dwelling shall not exceed fifty percent (50%) of the existing primary dwelling area
  • The total floorspace of aa detached ADU shall not exceed 1,200 square feet.
  • Parking requirements for ADUs may be imposed but not exceed one parking space per unit or per bedroom, whichever is less.

Reasonable Restrictions on JADUs (Gov. Code § 65852.22)

  • Limit the number of JADUs to one per lot.
  • Require owner-occupancy in the single-family residence in which the JADU will be located. The owner may reside in either the remaining portion of the structure or the newly created JADU.
  • Require the JADU to be constructed within the walls of the proposed or existing single-family residence.
  • Require the JADU to include a separate entrance from the main entrance to the proposed or existing single-family residence.
  • Require the JADU to include an efficiency kitchen, which must include a sink, cooking facility with appliances, a food preparation counter and storage cabinets.

Religious Items on Doors

Civil Code Sections 1940.45 and 4706 restrict the ability for HOA governing documents to prohibit individuals within the association from displaying “religious items” on the entry doors and entry door frames of their respective dwellings.

“Religious Item” Defined
A “religious item” is defined as “an item displayed because of sincerely held religious beliefs.” (Civ. Code § 1940.45(c)(2).)

Permissible Restrictions
An association may adopt and enforce restrictions that prohibit the display or affixing of a religious item on any entry door or entry door frame to a dwelling that (Civ. Code §§ 4706, 1940.45(b)):

(1) Threatens the public health or safety.
(2) Hinders the opening or closing of any entry door.
(3) Violates any federal, state, or local law.
(4) Contains graphics, language or any display that is obscene or otherwise illegal.
(5) Individually or in combination with any other religious item displayed or affixed on any entry door or door frame that has a total size greater than 36 by 12 square inches, provided it does not exceed the size of the door.

Removal of Religious Items in Connection with Association Maintenance/Repairs
An association that is performing maintenance, repair or replacement of an entry door or door frame to a dwelling may require the member to remove a religious item displayed on the door or door frame during the time the association is performing the work. (Civ. Code § 4706(b).)  If such temporary removal is required, the association must:

  • Provide individual notice to the member regarding the temporary removal of the religious item; and
  • Permit the member to again display or affix the religious item to the entry door or door frame after completion of the association’s work.

Related Links

THOU SHALT NOT REMOVE THE MEZUZAH: California Legislature Enacts SB 652 to Protect Displays of Religious Items on Doors and Doorframes

Fidelity Bond Coverage

A fidelity bond is a form of insurance protection which covers losses that the policyholder incurs as a result of fraudulent acts by individuals.  It is used by an association to insure losses caused by the dishonest acts of the association’s employees, board members or officers.

Associations Must Purchase Fidelity Bond Coverage
Civil Code Section 5806 requires associations to purchase fidelity bond coverage.  Unless the governing documents require greater amounts, an association must maintain fidelity bond coverage for the following (Civ Code. § 5806.):

  • Directors, Officers and Employees. Fidelity bond coverage for its directors, officers and employees in an amount that equal to at least the combined amount of the associations reserves and total assessments for three (3) months;
  • Computer Fraud and Funds Transfer Fraud. The fidelity bond must also include computer fraud and funds transfer fraud.
  • Coverage for Managing Agent or Management Company. If the association uses a managing agent or management company, the fidelity bond coverage must also include dishonest acts by the managing agent or the management company and its employees.

Board Candidate Qualification
An association’s election rules or bylaws may disqualify a person from nomination to the board if that person discloses, or if the association is aware or becomes aware of, a past criminal conviction that would, if the person was elected, either prevent the association from purchasing fidelity bond coverage  or terminate the association’s existing fidelity bond coverage. (Civ. Code § 5105(c)(4); See also “Candidate Qualifications.”)

Related Links

AB 2912 Signed! Significant Changes to HOA Financial Review and Insurance Requirements
Published on HOA Lawyer Blog (September 20, 2018)

AB 1101 Signed!  Welcome Clarity to HOA Financial Protection Requirements – Published on HOA Lawyer Blog (October 2021)

CC&R Reference Absent from Deed

An association’s “Declaration of Covenants, Conditions and Restrictions” (“declaration” or “CC&Rs”) is a recorded document setting forth the majority of the powers, rights and responsibilities of the association and its members. A developer creates and records CC&Rs as “equitable servitudes” against each of the separate interests within the association’s development. Equitable servitudes are essentially contractual restrictions on the use of land which are legally binding on current and future property owners. (Civ. Code § 5975.) The restrictions contained in  CC&Rs are “clothed with a very strong presumption of validity which arises from the fact that each individual unit owner purchases his unit knowing of and accepting the restrictions to be imposed.” (Villa de Las Palmas HOA v. Terifaj (2004) 33 Cal.4th 73, 90.)

Even where an owner’s deed to his lot or unit within the association’s development does not contain a specific statement that the owner’s property is subject to the CC&Rs, the owner may nevertheless be bound by the CC&Rs and obligated to comply with the restrictions contained therein. Some relevant California case law addressing this issue includes the following:

  • A nonspecific reference in a deed (subject to “all restrictions of record”) was held sufficient to create mutually enforceable equitable servitudes and the deeds need not contain a statement that they are subject to a “common plan” as long as the restrictions demonstrate the existence of such a plan. (Fig Garden Park No. 1 Homeowners Ass’n. v. Assemi Corp. (1991) 233 Cal. 3d 1704.)
  • The California Supreme Court has held that a prior recorded declaration bound the lots encumbered by the declaration, even though the deeds to the encumbered lots did not refer to the declaration. (Citizens for Covenant Compliance v. Anderson (1995) 12 Cal. 4th 345.)

“Prevailing Party” & Attorney’s Fees

When a lawsuit is filed to enforce a HOA’s governing documents (i.e., to enforce a provision of the HOA’s CC&Rs), the “prevailing party” in the lawsuit is entitled to an award of its attorney’s fees and costs. (Civ. Code § 5975(c); See also “Attorney’s Fees Recovery.”) This attorney’s fees provision of the Davis-Stirling Act “reflects a legislative intent that [the prevailing party] receive attorney fees as a matter of right (and that the trial court is therefore obligated to award attorney fees)” to the prevailing party. (Salehi v. Surfside III Condominium Owners Assn. (2011) 200 Cal.App.4th 1146, 1152.)

The Davis-Stirling Act does not define the term “prevailing party,” nor does it provide a metric or formula for making that determination. As a result, California Courts have “concluded that the test for prevailing party is a pragmatic one, namely whether a party prevailed on a practical level by achieving its main litigation objectives.” (Heather Farms HOA v. Robinson (1994) 21 Cal.App.4th 1568, 1574.)  Where both sides achieve some positive net effect as a result of the court’s ruling, the determination of prevailing party is made by comparing the practical effect of relief attained by each party. (Almanor Lakeside Villas Owners Assn. v. Carson (2016) 246 Cal.App.4th 761, 775 (“Almanor”).) For example, being awarded only a fraction of the amount of fines initially sought by a HOA in a lawsuit to enforce its rules may provide some positive effect for the defendant homeowner.  However, if the key issue in the lawsuit was the HOA’s right to enforce rules and to impose fines, the HOA may still be deemed the prevailing party entitled to recover its attorney’s fees. (Almanor.)

Related Links

Recovering Pre-Litigation Attorney’s Fees in HOA Disputes – Published on HOA Lawyer Blog (March, 2013)

Attorney’s Fees are Recoverable to Enforce Settlement Agreement Reached in ADR – Published on HOA Lawyer Blog (November, 2016)

Clarifying When a HOA may be Deemed the ‘Prevailing Party’ in an Enforcement Suit – Published on HOA Lawyer Blog (January, 2017)

Pesticide Application

Fulfilling an association’s maintenance responsibilities may result in the need to apply pesticides to common areas and in some instances to an owner’s separate interest.  When pesticides are applied, residents of the association must be provided with notice concerning the time of application and the pesticides to be applied, among other items of information. The laws governing what must be provided differ depending upon whether the pesticides are to be applied by a licensed pest control operator, or instead by someone who is not licensed by the State of California to apply pesticides (i.e., the association’s general landscaper).

Use of a Licensed Pest Control Operator
When an association retains a “pest control operator” that is licensed by the State of California, the pest control operator has to provide several items of information to the association so that the association may pass that information on to its residents. The information required to be provided by the operator to the association, and then passed on to the association’s residents, generally includes:

  • The date(s) of the schedule application of pesticides to the property;
  • The identity of the pesticide by brand or common chemical name; and
  • The precautions printed on the pesticide label or included in laws or regulations to protect persons doing the application.

For more information, see California Code of Regulations Section 6618(b).

Use of an Unlicensed Pest Control Operator – New Civil Code Section 4777
Legislation was enacted in September 2016 to impose requirements on associations that use persons to apply pesticides who are not licensed pest control operators. As a result of that legislation, new Civil Code Section 4777 will be added to the Davis-Stirling Act effective January 1, 2017.

Section 4777 generally requires an association to provide notice to its members and residents of the association’s development when pesticides are to be applied to an owner’s separate interest, or to common area, by an unlicensed pest control operator.  The notice must generally include information regarding:

  • The name of the pest(s) to be controlled;
  • The name and brand of the pesticide product to be used; and
  • The approximate date, time and frequency with which the pesticide will be applied, in addition to specified language in the Code disclaiming that pesticides are toxic chemicals.

This notice must be provided at least forty-eight (48) hours prior to the pesticide application by posting notice in a conspicuous location within the common area in which the pesticide is to be applied. If a posted notice is not practicable, notice must be provided by individual delivery.  For more information, see Civil Code Section 4777.

Related Links

HOA Compliance with California Pesticide Regulations – Published on HOA Lawyer Blog (January 27, 2014)

Notice to Members of Civil Action Against Developer

The California Civil Code specifies various pre-litigation requirements that an association must satisfy before it may file a civil action (i.e., a lawsuit) against the association’s declarant (its developer) for construction defects. (See “Calderon Process.”) In addition to those requirements, Civil Code Section 6150 requires an association to provide its members with written notice that a construction defect action is being contemplated against the developer for alleged damage to: (1) the common areas; (2) the separate interests that the association is required to maintain or repair; or (3) the separate interests that arise out of, or are integrally related to, damage to the common areas or separate interests that the association is required to maintain or repair. (Civ. Code § 6150(a).)

Timing of Member Notice
The notice must generally be provided at least thirty (30) days prior to the filing of any construction defect action by the association against the developer. (Civ. Code § 6150(a).)

Statute of Limitations Issues – If an association believes that the applicable statute of limitations will expire before the association files the construction defect action, the notice may be given within thirty (30) days after filing the action. (Civ. Code § 6150(b).)

Contents of Member Notice
The notice must specify: (1) that a meeting will take place to discuss problems that may lead to the filing of a construction defect action (i.e., a civil action); (2) the options, including the civil action, that are available to remedy the problem; and (3) the time/place of the meeting to discuss the matters referenced above. (Civ. Code § 6150(a).)

 

Calderon Process

In 1995 the California Legislature enacted the Calderon Act. It establishes various pre-litigation and dispute resolution procedures that an association must satisfy before it can sue its developer (aka, its “declarant”) for construction defects. These procedures are collectively referred to in this article as the “Calderon Process.” The Calderon Process is separate and distinct from the Builder’s Right to Repair Law (commonly known as “SB 800”); SB 800 is another statutory scheme that affects construction defects and the resolution of claims an association may have against its developer. (See “Builder’s Right to Repair Law (SB 800).”)

The following is intended to summarize and outline some of the more notable pre-litigation procedures and requirements under the Calderon Process which are codified under Civil Code Section 6000.

Notice to Members of Contemplated Civil Action Against Developer (Civ. Code § 6150)
In addition to the Calderon Process and the notice requirements discussed below, Civil Code Section 6150 requires an association to, at least thirty (30) days prior to the filing of any construction defect action (i.e., a lawsuit) against the association’s developer, provide its members with written notice that the action is being contemplated. (See “Notice to Members of Civil Action Against Developer.”)

Notice to the Developer
An association with twenty (20) or more units (or lots) must give a pre-litigation notice (a “Notice of Commencement of Legal Proceedings” or “NCLP”) to the builder, developer or general contractor. (Civ.Code §§ 6000(b), 6000(p)(3).) The NCLP is designed to initiate a process for the association and developer to engage in compulsory mediation before litigation can be filed.

Contents of NCLP – The NCLP must include: (1) the name and location of the project; (2) an initial list of defects, sufficiently detailed to put the builder, and/or subcontractor, on notice of the nature of the alleged defects; (3) a description of the results of the defects; (4) a summary of the results of any survey or questionnaire conducted or distributed to unit or lot owners and intended to ascertain the nature and extent of the defects; and (5) if a test of the defective conditions was conducted, a summary of the test results or the actual test results. (Civ. Code § 6000(b)(1)-(5).)

Statute of Limitations Issues – Service of the NCLP acts to toll statute of limitations for one hundred and eighty (180) days, which may be extended by written agreement of the parties. (Civ. Code § 6000(b)-(c).)

Obligations of Developer and Association After Service of NCLP

Developer May Request to Meet & Confer – After service of the NCLP, the developer has twenty-five (25) days to submit a written request to meet and confer with the association’s board of directors. The meeting must take place within ten (10) days after the developer’s request, at a mutually agreeable time and place. (Civ. Code § 6000(d).) This meeting (and any other meeting), may be conducted during executive session and anything said during the meeting is privileged and may not be admitted as evidence in a construction defect action unless the privilege is expressly waived, in writing. (Civ. Code § 6000(d).)

Developer Must Provide Access to Plans & Construction Documents – In addition to the forgoing, and within sixty (60) days of service of the NCLP, the developer must provide, upon request of the association, access to inspect and copy all plans, specifications, subcontracts, and other construction documents reasonably calculated to lead to the discovery of admissible evidence regarding the alleged defects. If any document is withheld because of an alleged “privilege,” the developer must note such “privilege” in a “privilege log” prepared and submitted to all parties. (Civ. Code § 6000(e)(1).)

Association Must Provide Access to Certain Association Records – Similar to the developer’s obligation to provide access to its documents, plans, etc., the association must provide the developer, and any subcontractor, with access to all association files reasonably calculated to lead to the discovery of admissible evidence regarding the alleged defects. This includes, but is not limited to, reserve studies, survey questionnaires (if any), test results (if any), and maintenance records. (Civ. Code § 6000(e)(1).) The association is afforded the same option of claiming privilege, and must follow the procedures outlined in the preceding paragraph.

Developer Must Notify Other Responsible Parties – Within sixty (60) days of service of the NCLP, the developer must provide notice to all subcontractors and design professionals, including their insurers, of the potential defect action. This notice is limited to those “whose potential responsibility appears on the face of the notice.” (Civ. Code § 6000(e)(2).) This notice must include, among other items of information not mentioned in this artice, all of the following: (1) a copy of the NCLP; (2) the date/time which the parties must meet and confer to select a dispute resolution facilitator (which is to occur within twenty (20) days after developer’s notice to all other responsible parties); and (3) and advisement to the recipient of his/her/its obligation to participate in the meet and confer process. (Civ. Code § 6000(e)(2).) The recipient of such this notice must acknowledge receipt prior to the date established for the meet-and-confer meeting. (Civ. Code § 6000(e)(2).) Insurance information must be given by the recipient within ten (10) days after acknowledging receipt of builder’s notice. (Civ. Code § 6000(e)(2).)

Selection of a Dispute Resolution Facilitator
In connection with the procedures outlined above, the parties must select a “dispute resolution facilitator” (“Facilitator”). The Facilitator is typically an attorney or retired judge retained by the parties to preside over the mandatory mediation. The primary purpose of the Facilitator is to promote the fair resolution of the dispute. To that end, the Facilitator must be knowledgeable in construction defect claims, and must have sufficient time to devote to the case as he or she is likely to spend a considerable amount of time with the parties.  (Civ. Code § 6000(f)(1).)

Case Management Meeting with Facilitator
Within one hundred (100) days of service of the NCLP, the Facilitator must convene a case management meeting. (Civ. Code § 6000(f)(1).) The purpose of the case management meeting is to create a case management statement, which establishes various obligations and rights of the parties with respect to, for example, non-intrusive and invasive testing. (Civ. Code § 6000(h)(1)-(8).)  With the help of the parties, the Facilitator will establish completion deadlines for each of the elements contained in the case management statement. These deadlines may be extended by mutual agreement of the parties, which will usually require the parties to extend the one hundred and eighty (180) day dispute resolution time limit imposed by Civil Code Section 6000(c). (Civ. Code § 6000(j).)

Developer Settlement Offer & Notice to Members
At any time during the dispute resolution process, and as determined by the Facilitator, the developer may request a meeting with the association’s board of directors to discuss a written settlement offer. (Civ. Code § 6000(k)(1)(A).) The meeting must occur within ten (10) days after the develper submits a request to the association. (Civ. Code § 6000(k)(1)(C).)  The written settlement offer must contain: (1) an explanation of the reasons for the terms of the offer; (2) a statement affirming that the builder has sufficient funds to satisfy the offer; and (3) a summary of test results (if any testing has been conducted). (Civ. Code § 6000(k)(1)(A)(ii)-(iv).)

Rejection of Settlement Offer – If the board decides to rejects the settlement offer, it must hold a meeting open to the membership of the association at least fifteen (15) days prior to filing a construction defect action against the developer. (Civ. Code § 6000(k)(1)(D).)  Additionally, and at least fifteen (15) days prior to the meeting, the association must provide owners with notice of the meeting, and said notice must contain the following: (1) a statement that the meeting is being conducted for the purpose of discussing defect problems that may result in the filing of an action against the developer; (2) the options available to the association to address the problems (and how the association anticipates financing those options); (3) a complete copy of the written settlement offer; and (4) a concise statement explaining the specific reasons for the terms of the offer. (Civ. Code § 6000(k)(1)(E).)

Acceptance of Settlement Offer – If the association decides to accept the settlement offer, the board must notify the membership of the settlement. This notice must include: (1) a statement that a settlement has been reached; (2) a description of the defects to be corrected under the agreement; (3) a good faith time estimate as to when the defects will be corrected; and (4) the status of other defect claims not covered by the settlement agreement (if any). (Civ.Code § 6100.) This notice may be amended, as required (Civ.Code § 6100(b)), and such amendment does not waive any privilege attached to the information (Civ.Code § 6100(c)).